Tuesday, March 24, 2015

Time Warner's Big Hit

Sources told The Post that the market rate for the channel is more
likely $3 per subscriber per month, meaning the charge will be almost $1
billion when adjusted over the life of the contract or in the region of
$700 million in present-day terms.

“Comcast will be made whole,” said the source, suggesting this mess
had to be cleaned up as a condition of Comcast’s proposed deal to
acquire Time Warner Cable.

“Unless the deal [to merge Time Warner and Comcast] closes, there will not be another [Dodgers] season
shown outside of Time Warner Cable. I don’t believe they’ll get
carriage,” a source told The Post.

I would even go so far as to suggest that, if the entity that bought the rights is independent, the Dodgers could end up on the wrong side of a bankruptcy. It's hard for me to imagine that Time Warner didn't protect their interests in this way, but dumber things have happened.

I have no doubt they created a single asset entity. If they didn't then they should fire their attorneys.

That said, i've gone back and forth on whether they would actually move towards bankruptcy. I could imagine a write-down happening regardless of a merger deal happening and TWC keeping the Dodger RCN as a long term asset. Although the RCN contributed greatly to their expense increase they also experienced "meaningful" (their term) viewership data. They just need to bite the bullet, take less per subscriber and hope that the long term revenue prospects evens out over time.

Or, maybe the Dodger debacle is worse then it seems and is the driving force behind the merger. And if the marriage doesn't happen then quarterly numbers get hit so hard that it threatens their entire operations.

I dunno... I want to delve into the financials, but I can't seem to find the time.

The funny thing is, live sports is fast becoming the only reason to subscribe to a traditional TV provider. Hulu/Netflix/Amazon/itunes/Sling and the coming apocalypse of HBO and Showtime as online entities are bringing us a la carte channels over the internet. I'm only subscribing to my current provider for convenience/laziness and the hope that my Dodgers are coming soon. If they decoupled MLB.tv from regional restrictions I'd probably cut the cord immediately.